National / World

Despite fall, GDP will bounce back sharply: RBI Governor

Fri, Feb 17 2017 11:59:33 AM

New Delhi, Feb 17 (PTI): Reserve Bank Governor Urjit Patel today said India's economic growth will make a "sharp V" recovery following the recall of old 500 and 1,000 rupee notes. Patel also made a strong case for continuing with globalisation even in the face of a potential shift to trade protectionism under US President Donald Trump as India has benefited from open trade.

"Almost everyone agrees that the impact is going to be a sharp 'V', that we would have a downgrade of growth for a short period of time," he told CNBC-TV18 in an interview. "However, the remonetisation has happened at a fast pace and that was part of the plan." RBI last week lowered economic growth for the current fiscal to 6.9 per cent from the previously projected 7.1 per cent, but saw it bouncing back in a big way to 7.4 per cent in 2017-18.

He said the benefit of junking 86 per cent of currency in circulation will take time to fully play out and needs more work to ensure they are lasting. Asked when India could achieve 9 per cent GDP growth, he said it is difficult to predict sustainable growth rates. Higher growth rate is possible if very fundamental reforms, especially in factors of production like land and labour, are undertaken, the Governor said.

"Now how much higher than 7.5 that we are achieving so far is difficult to say. But the fact is we need to grow at some point faster than we are now," he said. "I think 7.5 per cent growth rate is not something to be disappointed about." The six-member monetary policy committee (MPC) headed by Patel had last week kept interest rates unchanged at 6.25 per cent for the second straight meeting and changed policy stance to 'neutral' from 'accommodative'.

The change in stance, he said, gives more flexibility to cut, raise or hold rates as compared with an accommodative one on inflation outlook. "The best way that central bank can support growth on a durable basis is to ensure inflation is low, stable, there is financial stability and that is the role the central bank plays. Very few countries grow at high growth rate if inflation is high and volatile. So, I think we are doing our bit to support higher growth rate, but on a durable basis," he said.

The RBI Governor expressed concern over the US moving towards protectionism under Trump. "I think it is a cause of concern for the world, I think it is a cause of concern for the emerging markets in terms of creating financial volatility. I don't think anyone will be safeguarded from it. We have to manage this as it plays out," he said.

Comment on this article

SMR, Karkala

Sat, Feb 18 2017

Mr.Guru,

Sir, After PM Modi's came to power in 2014 Lok Sabha elections India has not seen any scams?

If PM Modi is genuinely working for the interest of the nation, why did he reinstate former CM Yeddyurappa as party president in Karnataka? How CM Shivraj Singh Chauhan cling to office even after 50 deaths in 'Vyapam' scam ? Why there are no investigation independent commision against PDS scam of Raman Singh government? Why do Rajastan CM excluded from lease granted for mining minerals in the Aravalli hills is against Supreme Court orders?

One of the biggest promise of Modi is bringing back 'black money' from tax havens within 100 days in office? Why PM Modi's Switzerland visit does not make any progress? Why did mother of all scam 'Panama gate' is sitting in prime minister's office without any investigation for last 6 months?

Manmohan singh has proved his capability twice when Indian economy is bad shape? He has proved is knowledge worth keeping quiet and working for the economic progress of the country?

What is the Modi's achievement other than UPA puls cow governance and mann ki baat?

Vincent Rodrigues, Katapadi/Frazer Town,Bangaluru

SMR, Karkala

Now RBI governor talks like BJP leader Subramanian Swamy who predicted rupee will appreciate to Rs 35 per dollar from over Rs 61 in the next two years if NDA comes to power.

In his Twitter comment In 2017 $1= Re1 (5:03 PM - 21 Apr 2012).

Unless there is some match fixing or some immediate measures Indian Rupee lost like bouncing ball in the match.

The Public sector bank loan is grown to 9 lakh crores. Default corporates became wilful defaulters. Labour who can afford meal pre 'demonization' jobless, manufacturing sector lost declining, farmer relying on agriculture is without support price.

Indian economy is not IPL match. It needs strategy and smart thinking. Manipulation of figures can't reverse the economy of the nation.

Bhandara, M'lur/Mumbai

Fri, Feb 17 2017

That is an amazing statement by BJP mouth piece and Ambani pocket liner Urjit Patel. He can never be a shadow of Mr. Rajan who had a voice of his own and knew how to manage the Central Bank of a country keeping all political influence at bay. Majority of Analysts from world renowned organizations including IMF tells us a different story! As per their Analysis, the growth is now expected to be around 6 to 6.5. What we hear from RBI Governor is nothing but a pack of lies dished out based on Finance Ministry's commands. It is a shame!

Jossey Saldanha, Mumbai

Flavian dsouza, chik/bengaluru

Fri, Feb 17 2017

Sad to see bureaucrats and senior officials lying and not backing their statements with facts and figures . This is what is being told to them by politicians and they keep talking . World is watching on how we have messed up is the last 2.5 years ...fake notes are now in full swing few truck loads of 2000 rupees have been confiscated god knows how much are in circulation

Pranav Kumar, Mangalore

Fri, Feb 17 2017

BJP has done the "Demonetization" purely “not taken in the national interest, but considering UP elections.”.It's a case of organised loot, legalised plunder of the common people".....as rightly said by ex P.M ...Dr. Manmohan Singhji.

Dr. Manmohan Singh completed his Economics Tripos at University of Cambridge. & Mr. Chidambaram studied at Harvard University. ....unlike Chaiwalla P.M(56") who did only hard work by selling tea at railway flat form and got degree by....!!! and Crook lawyer turned F.M of BJP(Bharatiya Jokers Party!!!

Tom Cat, Mumbai

Fri, Feb 17 2017

GDP will bounce back only after Rajan is restated and Manmohan is PM, not a useless chaiwale who does bakwas. Otherwise, India will be another Somalia. Good to know congress ruled India for sixty years.

HENRY MISQUITH, Suratkal/M'lore/Bahrain

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Title : Despite fall, GDP will bounce back sharply: RBI Governor

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